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HomeMy WebLinkAbout2006-01-24 Water Board MinutesMINUTES DEPARTMENT OF WATER SUPPLY COUNTY OF HAWAII WATER BOARD MEETING January 24, 2006 HILO OPERATIONS CONFERENCE ROOM MEMBERS PRESENT: Mr. Loren Heck, Chairman Mr. Thomas Goya, Vice - Chairman Mr. Bernard Konanui Mr. Ivan Mochida Mr. Riley Smith Mr. George Wilkins Ms. Millie Kim Mr. Milton D. Pavao, Manager, Department of Water Supply (ex- officio member) ABSENT: Ms. Paula Helfrich, Water Board Member Ms. Sandra Scarr, Water Board Member Mr. Bruce McClure, Director, Department of Public Works (ex- officio member) OTHERS PRESENT: Ms. Katherine Garson, Deputy Corporation Counsel Mr. Daryn Arai, representing Mr. Christopher Yuen, Director, Planning Department (ex- officio member) Mr. Don Nitsche Mr. Jim Stutheit Mr. Gerald W. Holleman Mr. Bob Barry Mr. Jimmy Yocom Ms. Elinor Yocom Ms. Trisha Macomber Ms. Morgado Ms. Phoebe Lambeth Mr. Richard Cuthbert, R. W. Beck, Inc. Ms. Diane Robertson, R. W. Beck, Inc. Mr. Mel Kawahara (10:55 a.m.) Department of Water Supply Staff Mr. Quirino Antonio, Jr., Deputy Manager Mr. Glenn Ahuna, Engineering Division Head Page 1 of 19 1 -26 -06 Minutes.doc Mr. Daryl Ikeda, Chief of Operations Mr. Richard Tsunoda, Waterworks Controller Mr. Richard Sumada, Assistant Waterworks Controller (11:06 a.m.) Mr. Lawrence Beck, Engineering Division Mr. Keith Okamoto, Engineering Division Ms. Claire Kawahara, Customer Service Representative (10:55 a.m.) CALL TO ORDER - Chairman Heck called the meeting to order at 10:03 a.m. and introduced the members who were present. STATEMENTS FROM THE PUBLIC 1. Mr. Don Nitsche D. NITSCHE: As you probably know, the monitoring well, or test well, in Ocean View has finally reached the step; and they found water, I understand, four feet above sea level; and after the water got lost for a while, they finally got a test on it. I think this was the problem with USGS. But anyway... and the water quality is very good. We, in Ocean View, would like to see that instead of a 4 -inch casing put down, a 6 -inch casing put down so we can get a pump down in it and pump it and really get a good feel for what the water is. Just knowing the height above sea level and the quality of the water really doesn't give a very good test. So we proposed to USGS and to Milton that we put a 6 -inch casing down, which I understand is marginal; but we feel it can be done. There is an 8 -inch bore, and we feel that the 6 -inch casing could be put down; and a pump could be installed, and it could be classified as an emergency well. Under that, my understanding is these monitoring wells and test wells can be used for production water if it's an emergency. Well, we certainly are in an emergency situation in Ocean View. As you know, we have to truck our water 28 miles round trip, and there's many factors which we've gone over with through the years why we're so desperate for water. We have very little rainfall there so we have to truck our water. So we did contact Congressman Ed Case, and we have from him; and he's in favor of it, I believe. I'll read his letter that was back to Gordon Tribble of the USGS. (Mr. Nitsche read from letter.) "I understand significant progress has been made in drilling the test well at the Rancho subdivision in Ocean View. I understand further that designation of this well as an emergency water source would allow for installation of a 6 -inch pump and testing of the recharge rate. As you know, the Ocean View community consists of 6,000 waterless residents who desperately need access to fresh water. It certainly seems as though this well should qualify as an emergency water source. Please let me know what can be done in any way and any other actions that would expedite development of the water source for my constituents who live in Ocean View." This was back on November 18. Gordon Tribble is not our favorite person in Ocean View. I hate to talk bad about people, but I think he's done a very poor job of managing his project out there, right from the beginning. And lack of communication; and -, when he did make -, he didn't stand by what he said he was going to do. And anyway, I won't delve into that. I'm sure you're pretty aware that it's been a -, I don't know what word to use... a difficult project getting it done; but Page 2 of 19 1 -26 -06 Minutes.doc thank God it's finally done. And now they're about ready to put the 4 -inch casing down ... it would probably be happening, but they had a breakdown and they pulled the crew off; and where they are, I don't know right now. But it's at a standstill on putting the 4 -inch casing down. So we would really like to see a 6 -inch casing put down that could accommodate a pump, and a motor. As you probably know, we've got $6 million earmarked from the State for Ocean View's water and test well -, production well and test well. It seems to be playing games around Honolulu trying to get it loosened up to come to the County and then to the Department of Water Supply to oversee and put this well in. I just got off the phone with Linda Smith who is in the Governor's Office; and I guess, by accident, Milton and Andy Levin found out that it was in the Attorney General's Office being held up. Correct me if I'm wrong, Milton, but anyway, and then she was going to clear this up. This is a couple weeks ago. M. PAVAO: Yeah. It's not being held up by the Attorney General's Office. The State asked the Attorney General's Office to look into something before they would release it. D. NITSCHE: Okay. So my understanding was they wanted water credits and they wanted for Kona to start with and now it's been changed to Hilo where they have State facilities, the University of Hawaii and different State buildings. And I don't quite understand... maybe you can clue me in ... what this water credit thing is. Is that a monetary credit or, I think you said, it was a -, how does that work? How do we unstick this to get the funds? CHAIRMAN HECK: Mr. Nitsche. I really want to get into this; but there is a time in the future, on the Agenda, that we can handle this. D. NITSCHE: Alright. Okay, that's fine, but -, CHAIRMAN HECK: If you could stick around for questions later on. D. NITSCHE: Okay. We're very concerned. We've been working diligently, almost tracking daily with Honolulu trying to find out where these funds are. We finally did that just now - -we've got a handle on where they're at, but we've been kept in the dark about it; and we'd like to get that handled. But the main thing is out of this $6 million, we would have plenty of funding, I believe, to go ahead, and this isn't a very big item to put in this 6 -inch casing and pump. The Department of Water Supply has spent all this money and all this energy and all this time getting the well in ... let's go just a little bit farther and call it an emergency well and put the bigger casing and a pump in. And then we use it as a backup source if our main source goes -, happens to have a problem later on. We definitely want to go ahead with the production well and the $6 million from the State; but in the meantime, we'd like to have this well upgraded to an emergency well with a 6 -inch casing. And I understand it can be done. It's just a matter of -, it's a little bit -, it's gonna take a little bit extra effort. Gordon Tribble doesn't want to do it. He suggested to me that the Department of Water Supply take over the rig and go ahead and do it, but that was his idea. I don't know what would work, but we'd like to find a way to enlarge that casing to 6 -inch and put a pump down. CHAIRMAN HECK: During the Manager's Report, we're probably gonna have some questions of you, so if you would be here to do that. Page 3 of 19 1 -26 -06 Minutes.doc D. NITSCHE: Right. Now, Jim Stutheit, I believe, is on the Agenda to talk. He's got some costs involved for the 6 -inch casing, we would get credit for the four, of course; and a pump. So he'll follow, I guess, later on in the presentation and cover that part of it. Thank you very much for your time. I appreciate the Department of Water Supply. You've been very cooperative all the way through and all of the times we've been here, and I want to compliment you on that. CHAIRMAN HECK: Thank you. 2. Mr. Jim Stutheit J. STUTHEIT: Basically, I just want to endorse what he has said that I believe it would be very beneficial to the whole community if we had an emergency source of water. Apparently, it's good quality water. All we really need to do to get use of it is to put in the 6 -inch casing and then I've got some data here on an appropriate pump that would fit into a 6 -inch casing and provide about 11 gallons a minute water available; and if we have a standpipe, a storage unit, we could fill it. And this is really quite urgent because less than a month ago, we had a wildfire in Hawaiian Ocean View Estates, about a mile from where the well is, that burned many, many acres and threatened many houses and there was almost no water. They were fighting it with hoses from the house so it really is an emergency need for the community. If anybody wants to look at this, it's got the performance curves and mechanical size and electrical needs of it. Chairman Heck asked that copies be made of Mr. Stutheit's handout for the Board Members before the end of the meeting and thanked Mr. Stutheit. APPROVAL OF MINUTES MOTION: Mr. Mochida moved for approval of the Minutes of the December 20, 2005, Water Board Meeting; seconded by Ms. Kim. Secretary noted one correction to Page 1 - under Attendance, Department of Water Supply Staff, Ms. Cristita Hudman was not present at the meeting. ACTION: A vote was taken on the Motion to approve the Minutes, as corrected. Motion was carried unanimously by voice vote. APPROVAL OF ADDENDUM AND /OR SUPPLEMENTAL AGENDA - none MISCELLANEOUS: C. NATIONAL RAINWATER CONFERENCE - 2007: (There being no objections, this item was taken up early.) Ms. Trisha Macomber introduced herself as Educational Specialist, University of Hawaii cooperative extension service in the Department of Natural Resources and Environmental Page 4 of 19 1 -26 -06 Minutes.doc Management. Joining her was Ms. Phoebe Lambeth, who is the President of the South Hilo Rotary Club; and Ms. Dianne Morgado, President of the Volcano Rotary Club. Ms. Macomber stated that they were here together to ask for support for a National Rainwater Catchment System Association conference. Six months ago, she won the bid to hold this conference, which will bring national and some international experts to the Island of Hawai `i where so much catchment is being used. A lot of us know about catchment in terms of local individual home users; but more national thoughts are that catchment is used as a supplemental water supply, especially for municipal systems that are stressed or have poor quality water, and also environmentally as runoff control. For example, the City Hall in Seattle (8 stories high) is on catchment. They use it for their fountains, their irrigation, and actually catch 98% of all runoff on their property and reuse it. It saves cost by not using treated water for irrigation and they also have to treat water that goes into the sewer system so they are saving money actually twice. They are looking at getting the large community involved in this. Besides Rotary International, whose focus is water at this time period, just in the State, they would like to see it addressed both supplementally as water supply and also for homeowner use. They are looking at doing programs; for example, umbrella designing contest where they get the community involved a lot. They want to get the west side of the island involved. They determined if they put a rain barrel on every home over in Kailua -Kona and they used that rain barrel one time for irrigation, it would save approximately 800,000 gallons of water every time they empty that barrel. It is a simple thing; but the more support and encouragement using rainwater as a supplemental water source, not only are we saving the County money from having to use treated water for irrigation in non - potable use, but it is also environmentally sound way to sustainable water use. What they are looking for is some help with this conference. After this conference is held, there will be an international one soon after in Australia, so they expect a lot of international attendees because it is a stop on the way. Their budget is about $134,000.00 with $48,780.00 in contributions and about $59,500.00 cash. They are hoping to get the Water Board to support them and perhaps fund approximately $28,000.00 to $29,000.00 of this conference. Ms. Morgado stated that Rotary's participation in this is going to be substantial. All four east -side clubs have been presented by Trisha and have agreed to help her underwrite some of the cost of this conference. One of Rotary's main focuses is to ensure that there are sources of clean safe drinking water and, in general, safe water supplies for everyone on earth; and it begins right here. This is an island economy and really needs to be more conscious of the fact that this is a resource that has to be tapped into effectively. Rotary would like to do things like offer school children the opportunity to decorate umbrellas to get them interested in water sources. They are also looking at a rain barrel project for West Hawaii and will be hosting a dinner that will involve the community and hope to have it at Hawaiian Paradise Park's Community Center. She also mentioned the Rotary Club's connections to television media, which it will utilize to get coverage for this conference to raise awareness of water catchment. Ms. Macomber stated that they would also like to work on changing attitudes. There are a lot of negative feelings about having to be on water catchment. They would like to introduce the public to the attitude of the mainland that it is a positive thing. There is a new subdivision in Texas that requires all homes to put in catchment systems. Page 5 of 19 1 -26 -06 Minutes.doc In response to Mr. Wilkins' question of when this conference will be held, Ms. Macomber replied it is to be held October 15 to 17, 2007, and a preconference to be held October 14 (at Kilauea Military Camp). They will need cash by August of this year in order to start placing downpayments to secure facilities and transportation. They would like to do a tour in the volcano community (which is one of the few totally reliant on catchment). Mr. Smith had a question about their draft budget and where they came up with the specific amount from the Water Board. Ms. Macomber replied that it was based on professional conference planners, their association, and the Rotary Clubs. Chairman Heck stated that on this island, sometimes catchment is frowned upon. He asked what their relationship is with the Planning Department. (Ms. Macomber replied there is none.) Chairman Heck asked if they are more or less independent. Ms. Morgado replied that there are no County or State regulations for catchment. If you buy a home that is not on County water, what you put up to catch your water is up to you. That is where Ms. Macomber comes in, having written a book on rainwater catchment, which is passed out freely by the Board of Realtors and their membership, to get over the hump of people coming from the mainland to buy homes here; and they will not look at homes on catchment. This needs to be looked at. As taxpayers, we also need to realize that the more people that are on catchment, the less infrastructure has to be provided by the County. There has been a surge of growth here but not enough thought of how to counterbalance it with things that also might be good for the ecology. Chairman Heck agreed that this is very timely but suggested that they get together with Mr. Christopher Yuen, Director of the Planning Department, and give as much positive influence as they can. He thanked Mss. Macomber, Morgado, and Lambeth and asked that this be placed on the Agenda for the February 28, 2006, Water Board Meeting. (Mss. Macomber, Morgado, and Lambeth thanked the Board and left the meeting at 10:26 a.m.) NORTH KOHALA: A) JOB NO. 2002-805, MAKAPALA PRODUCTION WELL AND SUPPORTING FACILITIES: The Board considered a request from the contractor (Isemoto Contracting Co., Ltd.) for a 170 - calendar day time extension due to delays beyond their control. Staff has reviewed the request and finds that the 170 calendar days are justified. The Manager recommended that the Board approve a contract time extension to Isemoto Contracting Co., Ltd., of one hundred seventy (170) calendar days from February 8, 2006, to July 28, 2006, for JOB NO. 2002-805, MAKAPALA PRODUCTION WELL AND SUPPORTING FACILITIES. Page 6 of 19 1 -26 -06 Minutes.doc MOTION: Mr. Goya moved for approval of the Manager's recommendation; seconded by Mr. Mochida. In response to questions about the building permit, staff explained about the sprinkler system, which DPW's Building Division interpreted as a requirement because of a different building code they were using. It is near settlement and should be completed within the time indicated and within the contingency amount. ACTION: A vote was taken on the Motion. Motion was carried unanimously by voice vote. MISCELLANEOUS: A. DEDICATION OF WATER SYSTEMS: The Department received the following documents for action by the Water Board. The water systems have been constructed in accordance with the Department's standards are in acceptable condition for dedication. 1. GRANT OF EASEMENT AND BILL OF SALE MAHILANI PUD NO. 068 Formerly Subdivision Application No. 2002 -056 Grantor: James P. Gannon and Angela R. Gannon TMK: 7 -3- 011:043 portion E.W.O.: 2005 -010 Lots: 1 existing — 6 additional = 7 total Zoning: RS -10 Facilities Charge: $34,190.00 (6 Lots @ $5,500.00, 1 Lot @ 1,190.00) Paid: April 29, 2004 Capital Assessment Fee: $3,000.00 (6 Lots @ $500.00)Paid: April 29, 2004 Final Inspection Date: December 7, 2005 Water System Cost: $64,200.00 2. GRANT OF EASEMENT AND BILL OF SALE KONA SUNSHINE MAUKA SUBDIVISION Subdivision Application No. 99 -084 Grantor: Dianne Feeney TMK: 7 -7- 023:023 E.W.O.: 2006 -035 Lots: 1 existing — 14 additional = 15 total Zoning: RA -.5A Facilities Charge: $78,190.00 (14 @ $5,500.00, 1 @ $1,190.00) Paid: 12/09/05 Capital Assessment Fee: $7,000.00 (14 @ $500.00) Paid: 12/09/05 Final Inspection Date: January 12, 2006 Water System Cost: $57,307.00 The Manager recommended that the Water Board accept these documents subject to the approval of the Corporation Counsel and that either the Chairman or the Vice - Chairman be authorized to sign the documents. Page 7 of 19 1 -26 -06 Minutes.doc ACTION: Mr. Wilkins moved for approval of the Manager's recommendation; seconded by Mr. Mochida and carried unanimously by voice vote. B. PRESENTATION BY R. W. BECK INC.: Mr. Richard Cuthbert reviewed R. W. Beck, Inc.'s, progress so far on the Water Master Plan. They need input from the Board on an informal basis regarding the C.I.P. program. He turned the Board's attention to Chapter 10, which was included with their copies of the Agenda. On this matter, Mr. Cuthbert needed a decision on the water rate study schedule; concurrence with next steps for personnel needs assessment; and input on public involvement efforts. Ms. Robertson reviewed the changes since their presentation to the Board at its November 22, 2005, meeting: • 30% indirect costs added to construction costs, intended as a contingency for unknowns, such as engineering, legal, administration, and other construction unknowns. • Grant/loan funded projects added as part of C.I.P. • Renewal and replacement projects added. DWS staff has a need to be able to fund and implement renewal and replacement of its existing facilities. When the presentation was made last November, she had talked about three different funding levels for the C.I.P. In today's presentation, it was bracketed into two scenarios- -high and low. The numbers have increased since November due to the changes just mentioned. The two scenarios are: • Low: $71.5 million over 5 years. • High: $119.2 million over 5 years. In the low scenario, you are looking at approximately $14.3 million per year, roughly. The actual projects that get done each year are driven by the number of years each project takes. In the high scenario, there is a significant increase, which would be $23.8 million per year. Both of these have implications to staff. In November, she had mentioned that they were planning things in terms of the organizational capacity. Financially, either the low or the high could be done; but the driving factor is the organizational capacity and ability of staff to do the level of C.I.P. they are showing for both the low and the high scenarios. Their graph shows the historical spending level for C.I.P., which has been increasing. Staff has been able to increase C.I.P. spending over the last few years. From 2006 to 2010 for a 5 -year C.I.P., the low range is about where staff was at in 2005; but it is still higher than the average of the five years- -2001 to 2005. Even for the low range, there would need to be some changes in terms of staffing or roles and responsibilities, which will be addressed with the Personnel Needs Assessment. Mr. Wilkins asked about the two pie charts shown - -they seem to not change their relative composition going from low to high, indicating no change in priorities; just more money spent in the high scenario. Ms. Robertson explained that they are both really high priority so there are certain specific projects on the books that DWS needs to finish -- storage, source, and supply projects. The renewal and replacement is critical and needs to be implemented at a higher level more regularly. Page 8 of 19 1 -26 -06 Minutes.doc Chairman Heck noted Table 10 -1, Page 10 -3, at the top "projects funded by grants or loans as well as projects anticipated to be funded by developers." There has been a lot of talk about a State allocation of funds ($6 million pending). He wondered why it was not shown. The Manager replied that the reason is that when this study began, there was no knowledge of the funds being released to DWS. The original intent was to have it released to the County, and this Department would assist. That is usually the way it works. Chairman Heck commented that it would probably still affect this Department's staff. (The Manager agreed.) Chairman Heck asked if there was data from 2003, 2004, and 2005 to show some consistent relationship between what was proposed and what actually was achieved in prior years, to give a better idea. There seems to be a very big generality. Mr. Cuthbert replied that there was a significant difference between the encumbrances and the expenditures. They expect delays in some of the projects, which are somewhere between 20% to 40% but foresee a vamping up of actual expenditures. What is seen in 2006 may actually be carried over. Mr. Goya suggested doing an estimate on actual expenditures to show an increase over the planning period, recognizing and understanding the allocation of the money versus the actual expenditures. If this Department is going to ask the public for a rate increase, it needs to appropriately show the pertinent information. Mr. Cuthbert stated that this report has a lot of information on it, but the idea was to identify a target in terms of capital expenditures the Department is pushing for. What they need from the Board is feedback on whether it wants to see more done. The question is how to make that happen and that is where the Personnel Needs Assessment comes in. Having an expenditure level somewhere between those two points is a pretty reasonable expectation of what is happening in the Department. Ms. Robertson stated that when making the Personnel Needs Assessment, they need to know what level is wanted. Ms. Kim agreed with Chairman Heck's suggestion of looking at the average expenditures versus actual over the last five years, knowing that you have this carryover lag with projects from year to year. It would provide a better guideline over what the margin of differences is between proposed and actual. Ms. Robertson stated that they could come back and provide that information. Mr. Cuthbert continued that Mr. Goya's question leads into the next issue of what it all means, financially. Assumptions of 2% growth in both customers and sales have been going into this. They have looked at engineering and operations staff increases for the two C.I.P. scenarios. Page 9 of 19 1 -26 -06 Minutes.doc Power costs are forecast to increase 6% per year. In the last water rate study process, the Board implemented a power cost adjustment that allows the Department to recapture, through rates, some lag in increases. From a financial perspective, power costs are off the table because as they go up, it is quickly translated into rate changes for the customers. In either the high or low case expenditures, there is no need for an increase in rates as of July 1 this year. Looking out in the longer term, the low level C.I.P. program would require one 5% increase July 1, 2007. In the high scenario, it would require three 5% increases. Included in that assumption is the first $25 million bond sale this year, and an additional $40 million of bond sales approximately two years later. With the new bond issue, the Department currently has about a 17% to 18% debt ratio. Most water utilities have between 30% and 50% debt ratio, so they are proposing a significant increase in bonds to pay for that higher capital improvement program. At the end of 2010, a debt service coverage ratio would be 1.63 in the low case or 1.47 in the higher case. A requirement of 2.5 is what most utilities plan, so there is plenty of coverage in that scenario. They have been conservative in their assumptions, using the 5% to get a 1.5 debt service coverage. What that means per water billing period is $5.00 /low case to $7.00/high case, or roughly 10% higher at the end of the period. Chairman Heck mentioned the annual growth in water sales of 2 %. He asked what it was in the previous five years and wondered if it has been increasing from year to year. Mr. Cuthbert replied that in the last rate study (five years ago), it was I%; but it has actually been more like 1.5% to 2 %. This is pretty much a continuation of the growth seen in the last five years. He added that the U.S. average growth is I %. In looking at the fact that there is no need for a rate increase this year, there is some question about changes to the Department that would increase the capital expenditures. Their thought was to delay the rate increase process until the fall of this year (six months) to get the Water Master Plan completed and do some more work on the Personnel Needs Assessment. The Board would probably be adopting a rate increase in a November/ December timeframe, to become effective May of 2007. The purpose of the Personnel Needs Assessment is to assess the Department's organizational capacity to effectively implement the Water Master Plan and the Strategic and Business plans. The main focus was on the Engineering Division rather than Finance and Operations divisions. He mentioned interviews that were held with staff members last year (discussed at the July 26, 2005, Water Board Meeting) in an effort to identify staffing needs and procedural and work assignment changes that may improve efficiency. Some issues that came up from that were: • Additional staff will be needed to increase the level of capital improvements and provide renewal and replacement, and operations and maintenance of facilities. • Communication improvements are needed between the divisions to help with efficiency. • Data flow among divisions should be consistent. • Work processes must be documented and implemented consistently within divisions. • Increased training will be necessary with changes in staff (a number of senior staff members nearing retirement). In response to Mr. Smith's question as to whether the communication problems were due to equipment or attitudes, Mr. Cuthbert replied that he would say it is more a cultural thing in terms of Page 10 of 19 1 -26 -06 Minutes.doc how people do things. It is not necessarily a management issue or an equipment issue but is associated with processes and the way things have been done traditionally. There are new ways of doing things that have not been introduced. Mr. Cuthbert continued that through the Personnel Needs Assessment, they identified eleven positions needed to carry out the lower scenario, versus 17 to carry the high level. There are a lot of existing positions that just need to get filled. Recommended next steps are: • Have workshops with the Engineering and Operations divisions to work on communications between the two divisions; work on identifying what works and what does not work; identify barriers in communications and recommend how to improve; and clarify lines of responsibility. • Refine recommendations for staffing additions, changes in work responsibilities, policies and procedures. • Update the Strategic and Business plans, which were done about 11 /z years ago. A lot of what was initially said has been done, but some of it has not been. Need to identify what the road blocks are to doing some of the priorities that were assessed in the plans. This last step would probably require another workshop - -one with staff and one with the Water Board. The next steps in the Water Master Plan are: • Finalize C.I.P. (almost complete). • Complete the financial planning analysis. • Prepare Rate Study - they recommend delaying this until the first two steps are done. Recommend not as high a level of public outreach with regard to rate increases since they will not be significant increases. They do not see as many people coming out for that. Instead, they recommend more work to complete the Personnel Needs Assessment. • Complete the Water Master Plan documents. • Complete the Personnel Needs Assessment. • Update the Strategic Plan and the Business Plans. He asked for feedback on the Capital Improvement Program; on the notion of delaying the rate study schedule; concurrence on putting more effort into the Personnel Needs Assessment; and the idea of a reduced level of effort on public involvement. There will be some public involvement, but probably one public hearing for each community as opposed to a series of public hearings. Mr. Wilkins mentioned the huge number of water commitments outstanding in Kona. He would think the plan for drilling wells there would be where much more of the C.I.P. work needs to be done over the next five to ten years. Mr. Cuthbert stated that the numbers show what the Department needs to do from funding requirements, and then there are impacts from developers on the Department. For the Personnel Needs Assessment, you need to look at both of those because you do not need to be putting up the money the developers are doing for their projects. Part of the problem they have had on this project is staff's time being consumed by having to respond to this much higher than anticipated development of the last two years. The impact of development on staff is pretty important, and they tried to incorporate it into this Personnel Needs Assessment. It is hard to estimate how much is needed and how long this surge in development is going to last. Page 11 of 19 1 -26 -06 Minutes.doc Chairman Heck stated that it goes back to his question about the 2% in growth. If there is such a boom in development requests, it should show that there is a possible boom in population or in demand that should be expected, which may be more than 2 %. In the last year or two, it seems like everybody is moving here. Mr. Cuthbert replied that in most places, 2% is significant growth. That equates to 10% growth over the 5 -year period, which is pretty significant. The growth is not islandwide, but is more to specific areas, so the impacts of that need to be considered. Also, in looking at what happened with real estate all across the country, here is no different. Mr. Goya commented on the suggestion of cutting back on the public outreach for the water rates. He did not think the public should ever be taken lightly, whether it be a public meeting or public information. This Department is still without a Public Relations Specialist and that needs to be an integral part of any rate - making process for customer education and appropriate use of potable water. Personally, he thought that as part of any water rate plan, the Department should have everybody trained to answer the public and have a public information officer available. Employees should emphasize that this Department is not only revenue driven, but is more conscious of the use of precious resources. He also thought the Department should look for more incremental rate increases, perhaps annually, so it would be less of an impact in communicating to the media and the public. The fuel adjustment factor is going to increase 6% a year on top of a 5% increase for operational considerations. It may not be a large dollar impact, but it is a significant percentage impact. Mr. Smith commented on the 2% growth assumption. Although everyone is impacted by real- estate prices, in this case, it means the Department's growth versus growth of people moving to this island. If you move into a private high -end residential development, those are typically not Department of Water Supply customers, so you may see $5 million houses being built, but it does not impact water sales. Mr. Wilkins stated that the public may be more understanding and more likely to accept a cost increase if it is superimposed upon a curve showing the cost -of- living increase over the same period and shows where the Department would stand on the cost -of- living curve. Mr. Cuthbert stated that was a good suggestion. In response to Mr. Wilkins' question if the Department is allowed to deliberately generate a surplus to give more reserve for funding future projects, the Manager replied it is not. Mr. Smith asked if the Board was being asked to decide on whether to go with a high or low C.I.P. program scenario. Mr. Cuthbert replied that if he had to come up with it right now, he would probably have to fund the high capital improvement - -five rate increases that would end up being 5 %, and the Board would be voting for an increase that goes into effect over a year later. However, he wanted to make sure he gets concurrence that delaying it makes sense. The third point is the Personnel Needs Page 12 of 19 1 -26 -06 Minutes.doc Assessment, which needs more work. They had a large budget for public involvement that had to do with recognition that this Public Relations Specialist has not been hired yet. However, it is not going to be a very controversial plan. Having a Personnel Needs Assessment done seems like better use of those funds. Chairman Heck asked if Mr. Cuthbert was suggesting there is no need for a Public Relations Specialist in the next six months. Mr. Cuthbert replied that is not what he was suggesting. They would do that as part of the rate study and go out and talk about the master plan, but it would be in the context of what the rate changes would be. He suggested one meeting on each side of the island because last time, the proposal was for a 28% and a 15% increase and not more than 15 to 20 people showed up and that was in Kona where it was controversial. The Manager added that most of the people were there because of the agricultural use rates. Mr. Goya stated that at that time, oil was only about $20.00 a barrel. Just the power cost adjustment is a significant increase that is not being addressed. Just the cost of living is an issue and adds to everything that is purchased and to what people have to bear. Ms. Kim asked if the Board needs to come to a general agreement that the master plan is going in the right direction; if the Board will be looking at a rate increase in 2007; and whether it was a question of a high or low scenario and how to prepare for it. The Manager replied that basically what R. W. Beck, Inc., wants is to walk away from this meeting with is a sense of the Board's guidance as to what they should do and how to go about it. One of the concerns is if they should continue with the rate study or put it off until after the other plans are completed. Logically, it makes more sense to do it after the plans are complete because there is a good tie -in (with the rates). He agreed with delaying the rate study until after the plans are done. Chairman Heck asked the Board if there were any objections to delaying the rate study until after the master plan documents and Personnel Needs Assessment. There were no objections from the Board. Chairman Heck continued that there is some question about how many public meetings should be held. He asked Mr. Goya if he was suggesting more than one on each side of the island or what his feelings were. Mr. Goya replied that a limited amount is sufficient to fulfill the public process; however, public education should be an integral part of everything the Department does. The delay in hiring a Public Relations Specialist has been about one year. That is one year less in expertise from this person. He thought it would help pave the way. Mr. Cuthbert asked Mr. Goya if his concern was more with overall public outreach of the Department than public outreach on this study itself. Page 13 of 19 1 -26 -06 Minutes.doc Mr. Goya replied in the affirmative. Mr. Smith suggested that one way to evaluate how many people show up at meetings is how you do your public outreach. The more information that is put out there, the more the public's questions may be answered, so less people show up at the meetings. Also, on the current rate structure, there is a power cost adjustment, so when you talk about a 5% proposed rate increase annually for three years, to the consumer, it may be an 8% to 10% increase, depending on what happens with fuel. The Manager stated that is true; but in the overall scope of things, assuming fuel does not increase, a 5% increase on the basic rate may be less than actual 5% on the total bill. Mr. Cuthbert stated that the power cost is $1.16 right now. When it was implemented, it was under $1.00. In the last six years, it has gone up 16 %. From the Department's perspective, it was good that the power cost adjustment was implemented. At the time, $60.00 a barrel for oil was not envisioned and it is correct that the adjustment is on top of the other increases. The Manager commented that it has been a big help when explaining the increases to the customers. The Board thanked Mr. Cuthbert and Ms. Robertson for their presentation today. C. NATIONAL RAINWATER CONFERENCE - 2007: Taken up earlier. D. AMENDMENT TO EMPLOYER - EMPLOYEE CONTRACT: The contract is with Mr. Robert J. Arrigoni, providing services as the Department's Energy Engineer. The contract entitles the employee to the same pay increases as the Collective Bargaining Agreement for Unit 13. The Unit received an across - the -board increase of 31/2% effective October 1, 2005. The Manager recommended that the Water Board approve the 31/2% increase from October 1, 2005, to April 19, 2006, and authorize either the Chairman or the Vice - Chairman to execute the Amendment to Employee - Employer Contract, subject to Corporation Counsel's approval as to form and legality. MOTION: Mr. Smith moved for approval of the Manager's recommendation; seconded by Mr. Goya. In response to questions about the Department's satisfaction with Mr. Arrigoni and whether it was considering hiring him on a permanent basis, the Manager stated that the Department has been very satisfied with Mr. Arrigoni's performance and is working with Personnel on that matter. Page 14 of 19 1 -26 -06 Minutes.doc ACTION: A vote was taken on the Motion. Motion was carried unanimously by voice vote. E. MONTHLY PROGRESS REPORT: No questions. F. REVIEW OF MONTHLY FINANCIAL STATEMENTS: No questions. G. MANAGER'S REPORT: 1) Kona Coastview/Wonderview Improvement District - project going well. 2) USGS Drilling Program - the well drilling is complete; water was at 3.8 feet; chloride levels were about 9; and according to DWS lab analysis, it is good water, comparable to the Kulaimano Well. 3) Kona Water Quality - study is ongoing by consultant. Still in negotiations with several people in Kona to get additional sources and transmission corridors. 4) The Manager reported his findings regarding the reasonableness of the negotiated flat fee of $10,000 for compensation to Mr. Ed Broussard for the temporary use of a portion of his property designated as Tax Map Key 4 -3- 012:022 as it relates to Job No. 95 -621, Pohakea Water System Improvements, as requested by a Board Member at the December 20, 2005, Water Board Meeting. The Department got a great deal, based on what was found out. 5) Employee of the Quarter - Ms. Claire Kawahara, Customer Service Representative, was presented with the Employee of the Quarter award for the fourth quarter of 2005. Mr. Sumada reported that Ms. Kawahara has been with the Department for 16 years, is hard - working, dedicated, and very courteous and friendly. Ms. Kawahara asked if she may make a request of the Board. When it considers a water rate increase, to think of the Customer Service Representatives because they are the front line people who receive the calls from the public. The Board congratulated Ms. Kawahara on a job well done. 6) National Rainwater Conference 2007 As the Board heard earlier from organizers of this conference, the Manager asked the Board what it wanted exactly for the February 28, 2006, meeting agenda. Chairman Heck thought the Board needs to discuss their desire for funding and decide whether or not the Board is going to donate funds. Mr. Wilkins commented that it seemed like they might be running across purposes with a policy of the State to inhibit the building of homes that are on catchment. There ought to be more of an agricultural emphasis than human consumption emphasis. He was troubled not knowing how policies conflict in this case. Page 15 of 19 1 -26 -06 Minutes.doc Ms. Kim asked for the Manager's comments on the conflict about catchment versus non - catchment as a policy or direction and what this Department would recommend. The Manager did not think they were talking about rainwater as a potable source, but more of a supplemental to take the place of what is being used as potable. The presenters had given the example of how rainwater is caught on the mainland and used to irrigate their grounds. They also use it for toilets (duel systems). He did not think there is a conflict. Chairman Heck commented that it is very good for this Department to have a positive outlook on it, but he did not think the Planning Department is very desirous of this. He asked for Mr. Arai's thoughts on the Planning Department on this issue. Mr. Arai replied that if it is to supplement, then it is okay. The concern is if it is the primary source of potable water, then they have their concerns. The Subdivision Code basically means creation of a lot that is supported by an approved County water system. If it is a system that the DWS or the Department of Health would be comfortable with, then the Planning Department would support it as well; but you first must determine that this type of alternative source can be approved, regulated, managed by the State or County. Mr. Smith asked that when staff's findings are reported next month, to answer whether the Water Board has ever given money to a private conference; and if so, what amount. He noted that in putting on conference, you usually try to get user fees to cover most of the cost. Instead, they are looking at 20% user and 80% in donations. He felt that the conference is worthy, but wondered if perhaps they could be directed to other funding sources, if the Department knows of any. Ms. Garson stated that she will look into the legality of this type of thing. Although the Council has discretionary funds, she was not sure if this Board has. She will provide an opinion to the Board before the next meeting. 7) USGS Monitoring Well at Hawaiian Ocean View With regards to the suggestion of the 6 -inch pipe, Mr. Wilkins asked the Manager what his feeling was on it. The Manager stated that he thinks it is a bad idea. The hole would have to be redrilled to a larger diameter, and drillers cannot drill perfectly straight. If a boulder or something is knocked loose from the sides, it could fall into the hole and the well would be compromised. These monitoring holes are important for monitoring production wells. It would mean trying to put something down 2,000 feet with only 1 -inch clearance on each side. You would have to pay standby costs. The pump is only 11 gpm. He questioned spending all that money for 15,000 gpd. USGS is heavily regulated in terms of permissions on its wells. With reference to the suggestion of declaring the area as emergency, the question would be if it is forever. The USGS program might be jeopardized as well. He would recommend waiting for the production well because it is too much of a risk. Page 16 of 19 1 -26 -06 Minutes.doc Mr. Beck added that the 6 inches is the interior diameter - -not the external diameter, so there would be even less clearance than that. The Manager noted something from Mr. Stutheit's handout, which is the pump is 4 inches in diameter. It would mean going down a 6 -inch casing with only 1 -inch clearance, 2,000 feet in a hole that is not perfectly straight. Mr. Stutheit commented that the hole is actually drilled 8 51 8 inches in diameter, a little oversized because of the mechanical way of how you drill a hole. The point is that the pump is 4 inches, but the motor is about 5.4 inches. He thought it was worth the gamble, since the production well may be years away. Although it is at 15,000 gpm, when you run it for a week and have a storage tank, then you have a supply. Mr. Smith mentioned that this is not an item on today's Agenda and thought it would be prudent that the Department conduct its research and report it to the Board next month. The Manager mentioned an email he had received from Mr. Tribble regarding this issue, and he would make it available to the Board Members. USGS is opposed to it. Mr. Wilkins mentioned standards for having a straight well. The Manager explained that there are different standards for drilling used when the Department contracts out for potable well drilling. He reminded the Board that this is a monitoring well- - never meant for potable use. The criteria for straightness are not the same. Chairman Heck asked that this be placed on the Agenda for the February meeting and that staff get the needed details to the Board. He added that the area has had a declaration of emergency on it in the past, so it is not impossible. Chairman Heck asked about something that was briefly mentioned at the December 20, 2005, Water Board Meeting, and he would like to have on the Agenda for next month. It is regarding the $6 million from the State Legislature, which, as reported to the Board at that time, was not released. The State of Hawaii, Department of Land and Natural Resources, is asking for water commitments from the well, and the Manager was hesitant to grant it. The Manager clarified that he was not hesitant to grant it, as long as it is at Hawaiian Ocean View. What the State wants is to give the County $6 million, drill a well in Hawaiian Ocean View, then they want water credits in Kona. Chairman Heck asked if the Board could have more detail on this. It sounds like this is a possible deal breaker and if not responded to, the $6 million might be in jeopardy. The Manager stated that he responded to Mr. William Wynhoff of the State Attorney General's Office that this Department would be glad to give water credits in Hawaiian Ocean View if the Page 17 of 19 1 -26 -06 Minutes.doc well is drilled there from the $6 million. They wanted water credits in Kona, and he had informed them that he does not think the Department should do that. Chairman Heck asked what the ramifications are. The Manager replied that they are asking to see how much they can get and are pushing the envelope to see if they can get credits in Kona for a well that would be drilled in Hawaiian Ocean View. He does not think that is right. Mr. Wynhoff was informed that this Department would be willing to negotiate water credits in Hawaiian Ocean View. Mr. Wynhoff stated he would get back to the Manager, and that is where it was left off. The Manager added that he had a meeting in the Mayor's Office on a totally different subject, and Ms. Linda Smith, from the Governor's Office, was there. Mr. Andrew Levin spoke with her about getting this thing moving because the Mayor's Office wants to see it happen. The Manager informed Ms. Smith of his discussion with Mr. Wynhoff, and she said she would go back and check on the status. He did not know how the Board feels, but he would not give water credits in Kona for a well to be drilled in Hawaiian Ocean View. Mr. Wilkins stated that even the very nature of the water commitment says they must be satisfied within that particular water system. The Manager stated that this is strictly negotiation, so they can ask for anything. Ms. Garson stated that it would mean throwing the Department's rule on water credits and development out the window, so it is not just a personal preference, it is in the Rules and Regulations. In response to Chairman Heck's question of whether the Manager got the impression they were fishing or why bring up such a proposal, the Manager replied it is because they are short of water in Kona and are using this as leverage. Mr. Goya asked for agenda items for: • Addressing Councilman Safarik's concerns regarding drought conditions in Puna and what the Department's future plans are. • Updates the Department may have on its negotiations with Kamehameha Investment Corporation. Mr. Smith added to that to include any discussions with Bolton, Inc. 8) American Waterworks Association (AWWA) National Conference - June 11 to 15, 2006, in San Antonio, Texas. Board Members interested in attending may see Ms. Takeguchi. I. CHAIRMAN'S REPORT: Chairman Heck thanked everyone bestowing confidence in him, as Chairman, for this year and is happy to have Mr. Goya by his side. Page 18 of 19 1 -26 -06 Minutes.doc ANNOUNCEMENTS: 1. Next Meeting: The next meeting of the Water Board will be held on February 28, 2006, 10:00 a.m., in the Waimea Community Center (next to the Waimea Ball Park); Kamuela, Hawaii. The Board decided to tour the Waimea Water Treatment Plant and the three .50- million gallon reservoirs, leaving from the Waimea Community Center at 9:00 a.m. The tour is optional. STATEMENTS FROM THE PUBLIC None ADJOURNMENT ACTION: Chairman Heck adjourned the meeting adjourned at 12:03 p.m. Secretary The Department of Water Supply is an Equal Opportunity employer and provider. Page 19 of 19 1 -26 -06 Minutes.doc